Use the Federal Income Tax Brackets to See What You Really Owe

It's that time of year again when our minds start turning towards what taxes we will owe come April.

One of the critical pieces of the tax code are the federal income tax brackets.

These tax brackets were created to facilitate the taxing of different levels of income.

Our progressive tax rate structure (i.e. as income increases, taxes increase) requires that we define the starting and stopping points for the application of different rates.

Tax Brackets: A Quick History

The first federal income tax brackets came into affect in the United States back in 1913, when the income tax became a permanent fixture in our government.

The initial tax brackets, although very simple and low, were not unlike our current set of tax brackets. The initial rates ranged from 1%-7% and were applied to incomes from 0$ to $500,000 plus.

It wasn't until the 1940s until we saw the first unique tax bracket created for single filers and those married filing separately.

Over the years the federal income tax brackets have grown to as many as 50 different brackets, based on income. And rates on top earners grew to a massive 94% on incomes above $200,000.

Thankfully, in the late 80s much was done to simplify the tax bracket structure. Since then, we've settled in on anywhere from 5 to 7 rates across various incomes.

It should be noted that the income is based on taxable income (this number on line 43 of the Form 1040) and the income ranges vary from year to year based on inflation.

Nearly Half Don't Pay an Income Tax

Many people fork over a fourth of their paycheck each week to the federal government for income taxes. It's not fun to give up this money knowing that others aren't paying the same percentage.

The government does provide some benefit, but if everyone isn't contributing then that can't be perceived as fair, right?

There are certainly people in this country that should be exempt from paying taxes, but almost half is ridiculous. Surely some of those people are earning a decent living. How are they able to escape paying a tax?

Like many people, I feel like we need a simple solution to collecting revenue and that everyone should pay something. I would be in favor of some type of national sales tax or flat income tax. Anything to wipe the slate clean and just start over.

We have a mess of a tax code that makes it costly to file, enforce and collect. I'm not sure we'll ever see it happen though.

Use the Tax Brackets to Plan

If you are currently doing your tax planning for the coming tax year, you should look at the tax brackets below to help you in your calculations.

With a little bit of planning, you might be able to reduce your tax burden in the current year or defer it to the next, depending on what your desires are.

2018 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$19,050

$0-$9,525

12%

$19,051-$77,400

$9,526-$38,700

22%

$77,401-$165,000

$38,701-$82,500

24%

$165,001-$315,000

$82,501-$157,500

32%

$315,001-$400,000

$157,501-$200,000

35%

$400,001-$600,000

$200,001-$300,000

37%

$600,001+

$300,001+

2017 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$18,650

$0-$9,325

15%

$18,651-$75,900

$9,326-$37,950

25%

$75,901-$153,100

$37,951-$91,900

28%

$153,101-$233,350

$91,901-$191,650

33%

$233,351-$416,700

$191,651-$416,700

35%

$416,701-$470,700

$416,701-$418,400

39.6%

$470,701+

$418,401+

2016 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$18,550

$0-$9,275

15%

$18,551-$75,300

$9,276-$37,650

25%

$75,301-$151,900

$37,651-$91,150

28%

$151,901-$231,450

$91,151-$190,150

33%

$231,451-$413,350

$190,151-$413,350

35%

$413,351-$466,950

$413,351-$415,050

39.6%

$466,951+

$415,051+

2015 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$18,450

$0-$9,225

15%

$18,451-$74,900

$9,226-$37,450

25%

$74,901-$151,200

$37,451-$90,750

28%

$151,201-$230,450

$90,751-$189,300

33%

$230,451-$411,500

$189,301-$411,500

35%

$411,501-$464,850

$411,501-$413,200

39.6%

$464,851+

$413,201+

2014 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$18,150

$0-$9,075

15%

$18,151-$73,800

$9,076-$36,900

25%

$73,801-$148,850

$36,901-$89,350

28%

$148,851-$226,850

$89,351-$186,350

33%

$226,851-$405,100

$186,351-$405,100

35%

$405,101-$457,600

$405,101-$406,750

39.6%

$457,601+

$406,751+

2013 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$17,850

$0-$8,925

15%

$17,851-$72,500

$8,926-$36,250

25%

$72,501-$146,400

$36,251-$87,850

28%

$146,401-$223,050

$87,851-$183,250

33%

$223,051-$398,350

$183,251-$398,350

35%

$398,351-$450,000

$398,350-$400,000

39.6%

$450,000+

$400,000+

2012 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$17,400

$0-$8,700

15%

$17,401-$70,700

$8,701-$35,350

25%

$70,701-$142,700

$35,351-$85,650

28%

$142,701-$217,450

$85,651-$178,650

33%

$217,451-$388,350

$178,651-$388,350

35%

$388,351+

$388,351+

2011 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$17,000

$0-$8,500

15%

$17,000-$69,000

$8,500-$34,500

25%

$69,000-$139,350

$34,500-$83,600

28%

$139,350-$212,300

$83,600-$174,400

33%

$212,300-$379,150

$174,400-$379,050

35%

$379,150+

$379,050+

2010 Federal Income Tax Brackets

Tax Rate

Married Filing Jointly

Most Single Filers

10%

$0-$16,750

$0-$8,375

15%

$16,750-$68,000

$8,375-$34,000

25%

$68,000-$137,300

$34,000-$82,400

28%

$137,300-$209,250

$82,400-$171,850

33%

$209,250-$373,650

$171,850-$373,650

35%

$373,650+

$373,650+

Determine Your Tax Bracket

You may be wondering “what is my tax bracket?” That's a great question to ask because it shows you are curious about how much of your earnings are going to the U.S. Government to pay for the protection and services that they provide.

I think we tax payers sometimes fall asleep at the tax-paying wheel and don't pay attention to our taxes paid because they are taken out of our paychecks without much fuss. Knowing your tax bracket will help you to make educated decisions about money moves that will affect the taxes you pay at the end of the year.

Your federal income tax bracket is the rate at which your highest level of income is taxed. This rate is called your marginal tax rate.

Your marginal rate doesn't mean that you pay that exact percentage across all of your income. It just means that you are paying that amount on your highest level of income.

Therefore, if you are in the 28% tax bracket, you don't pay 28% of your income in taxes. You just pay 28% on everything over $91,900.

Another personal rate you might want to know is your effective tax rate. You calculate this by dividing your total tax by your taxable income.

Pull out last years return and see what you get. Someone in the 28% federal income tax bracket could have an effective tax rate as low as 17%.

Now that you know a bit of tax bracket history, the rates for this year, and some helpful calculations, you can begin planning for that big tax payment or refund next year.

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Last Edited: February 2, 2018 @ 3:07 pmThe content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!

About PT

Hi, I'm Philip Taylor. I'm a husband, father, blogger, CPA, and entrepreneur. I love learning to do more with my money and sharing it all here with you. Join in on the conversation and start improving your financial life today. Read more...

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The content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice.